by Linda Straker
- Finance Management Act and National Transformation Fund regulations approved by NNP administration
- Ministry of Finance indicates National Transformation Fund is in excess of EC$30 million
- Funds were established in law so that Grenada will have a level of savings for national emergencies
There are millions available in the Contingencies Funds as mandated in the 2015 Public Finance Management Act and the National Transformation Fund regulations which were approved by the Houses of Parliament by the former New National Party administration.
Section 22 of the Act establishes the fund for a percentage of the annual domestic revenue to be deposited into it, while the National Transformation Fund Regulation mandates by amendment that 10% of the monthly revenue of Citizenship by Investment inflows be deposited into a contingencies fund.
“There is hereby established a Contingencies Fund for the purpose specified in this section. The annual Appropriation Act shall approve an amount of public funds not lower than 2% of total annual domestic revenues, as estimated in the approved Budget for the next fiscal year to be paid into the Contingencies Fund,” instructs section 22 of the Public Finance Management Act.
Laying out the purpose of the fund, the legislation states, “The Contingencies Fund shall be used solely for urgent and unforeseen expenditures arising from emergency situations for which payments cannot be postponed until the passage of a supplementary budget or the next annual National Budget without seriously affecting the public interest.”
Section 11 of the National Transformation Fund regulations states, “The Board shall establish a Contingency Fund as a separate account of the Fund. In accordance with section 8 (3) (f) of the Fiscal Responsibility Act, 2015, from the first day of January 2016, at the beginning of every month, 40% of the inflows into the Fund from the previous month shall be directed to the Contingency Fund.” However, in January 2023, during a special sitting of both Houses of Parliament, Government changed the amount to 10%.
In a news conference on Tuesday, 9 July 2024, Prime Minister Dickon Mitchell was unable to disclose the total amount in the emergency funds but promised to disclose the amount in the future.
“I cannot give you an exact figure. My briefing from the Ministry of Finance indicates that in relation to the National Transformation Fund it is in excess of EC$30 million. I cannot give you the figure in relation to the contingency fund but I can endeavour to get a brief from the Ministry of Finance and provide a response on that,” he said.
Described as part of the Hurricane Ivan legacy, these funds were established in law so that Grenada will have a level of savings whenever there is a national emergency. The funding available from these accounts can be used as counterpart funding or be transferred to the consolidated fund for general budgetary spending.
“When the country was hit by Hurricane Ivan in 2004, we had no savings, we had nothing and we had to rely on international partners to help us. Now this should not and cannot be the same situation because these accounts were established so that we can help ourselves when a disaster such as a hurricane, storm surge or earthquake hits us,” said former Prime Minster Dr Keith Mitchell.
Prime Minister Mitchel said that Grenada will require millions to rebuild the country in the aftermath of Hurricane Beryl which battered the island on 1 July. The worst affected areas are the Grenadine islands of Carriacou and Petite Martinique, and St Patrick.
“There is no doubt that this disaster will have a major impact on the fiscal and financial and economic situation of Grenada. We are talking of hundreds of millions of dollars in losses and hundreds of millions of dollars to rebuild,” said the Prime Minister,
“This is going to be a long and difficult situation. We are exploring all options as to how we will finance the clean-up, the relief efforts and the rebuilding,” Mitchell said, adding, “We need to emphasise very early that the rebuilding must have resilience factored into it.”
He said the Ministry of Finance is meeting this week with “some of our international and regional partners, including the Caribbean Development Bank, the World Bank, the IMF, and we are also assessing whether we would need to suspend the operation of the Fiscal Resilience Act.”
Government repealed the Fiscal Responsibility Act (2015) and replaced it with the Fiscal Resilience Act (2023). This legislation is described as more simplified and less rigid, allowing the government greater flexibility to manage the economy. It provides for an escape law where certain sections can be suspended in the event of a national emergency situation.
